Monthly News Roundup – Mid-June 2025
We have compiled some news, comment pieces and announcements that we hope our readers find interesting. In this instalment, there are stories relating to artificial intelligence, utilities, defence spending, public finances and the cost of borrowing, virtue and commercial success, pensions and the environment:
Artificial Intelligence
Artificial intelligence shows great potential for transforming businesses and generative AI models are used by millions of people each week, yet companies who have invested in AI pilot products are struggling to make effective use of them, with some 42% having abandoned projects in the last year. Disillusionment can stem from a lack of suitable IT infrastructure at the company purchasing the technology, a lack of available expertise to make the AI model effective or a fear reputational damage in the event of an AI failure. There are implications for the large scale developers as well as the companies that make use of their products but the question for each is the same: how can generative AI be usefully integrated into businesses in order to produce worthwhile returns on investments?
https://www.economist.com/business/2025/05/21/welcome-to-the-ai-trough-of-disillusionment
Evidence of AI-imposed unemployment is scant, with figures and research remaining inconclusive when it comes to the question of whether technology is driving redundancies. In leading economies, unemployment remains low and wage growth is reasonably strong. Perhaps, therefore, those companies who announce investment in AI are not using the technology for ‘serious’ work, or, when companies do adopt artificial intelligence, they do not let people go; rather, AI is used to assist rather than replace employees:
https://www.economist.com/finance-and-economics/2025/05/26/why-ai-hasnt-taken-your-job
It seems that artificial intelligence is disrupting employment in the technology sector, with numerous announcements of staff redundancies. However, further large scale lay-offs appear unlikely as new projects involving AI will take time to develop and be put to use (if they are not abandoned prior to implementation or subsequently reversed). In addition, new roles are likely to be created in order to use and manage artificial intelligence:
https://www.ft.com/content/cb9ea970-e6de-4daf-aa9e-7a48d5e648c3
‘Vibe coding’ enables people with no expertise in coding to create basic apps or games by giving basic instructions in natural language to large language models, which then produce an approximation of what has been requested, with the user then in a position to request amendments. Will this make it easier for people with ideas but insufficient technical expertise to launch start-ups, or for companies to engage in technical development without having to hire professional coders? Perhaps individuals will be able to create their own, personalised apps without having to buy or subscribe to existing offerings. Others criticise the lowering of barriers – but it remains to be seen whether this is self-interest or simply insight into the limitations of what can be achieved without genuine technical skill:
https://www.ft.com/content/f4f3def2-2858-4239-a5ef-a92645577145
Environment and Sustainability
Technology companies, banks and shipping companies are investing in a new method of reducing carbon emissions that involves spreading crushed silicate rocks onto farmland in order to increase the surface area of the rock, thus mimicking and accelerating a natural reaction between absorbent rocks and rainfall. As polluters look for methods to reach net zero targets, ‘enhanced rock weathering’ is growing in popularity and stands behind certain forms of carbon credit:
https://www.ft.com/content/ffc2d60d-49fd-4d8c-ba2f-ee55b0447dff
An area of debate surrounding renewable energy is that of zonal pricing, whereby different rates of electricity are charged according to local supply and demand dynamics. Those in heavily populated areas would pay more, while those closer to sources of energy, such as the wind farms in Scotland, would pay less. The idea is that a zonal mechanism would address inefficiencies in the existing network while also encouraging the location of solar and wind farms close to places of high demand. Arguments for and against zonal pricing centre on the likelihood of businesses relocating to areas of abundant renewable energy, the possible effect on overall prices resulting from uncertainty among energy providers about the revenue likely to be generated by a zonal system and the level of waste in the current system, whereby wind farms are paid to stop generating in order to avoid overloading the grid, with gas plants being paid to provide for consequent shortfalls elsewhere:
https://www.telegraph.co.uk/business/2025/06/06/net-zero-rebellion-spark-action-keir-starmer/
Utilities
Thames Water has been fined a total of £122.7 million by the water regulator, Ofwat, for breaches of rules relating to its wastewater operations and the payment of dividends. Given the company’s level of debt, further penalties for failures in performance may deter future investment and ultimately result in the company falling into special administration, which would amount to renationalisation:
Public Finances and Interest Rates
With global economic conditions now being somewhat closer to how they were before the 2008 financial crisis, is it a mistake to expect that interest rates can be kept low? Along with increasing trade barriers and a reduced glut of savings, the world is also witnessing inflationary pressures such as labour shortages caused by ageing populations and shocks such as the war in Ukraine, as well
as increasing government debt. How will governments adhere to their commitments in a range of areas if the age of cheap money is coming to an end?
Pension Reform
The Pension Schemes Bill contains measures designed to encourage pension schemes towards more adventurous, UK-based investing and there have been claims about the extent to which this will increase the value of the average British worker’s pension as a result. However, are these claims – and the Bill itself – based on sound predictions regarding returns on investments? If a great deal of cash is suddenly invested in any asset, returns usually fall over the longer term and it is far from clear that investment in infrastructure – one of the sectors that is favoured for investment, alongside private equity and private debt – is reliable at present. Has the modelling for the predictions been based on unjustified assumptions about continuing returns from these sectors on the part of those whose own pensions will not be subject to their performance?
Defence Spending and Growth
With countries across Europe loosening their fiscal rules in order to increase their defence spending, the UK government has announced an aspiration for defence spending to reach 3% of GDP by the next parliament. Whether this will emerge as a source of jobs and prosperity will depend on how the additional funds are used. One suggestion is that over several decades, prioritising research and development in defence technologies by supporting start-up companies will yield better results in terms of raising the national income than will spending on personnel and equipment. Others have questioned whether increased military spending will have any serious effect on the creation of jobs in a sector which accounts for only 0.9 per cent of jobs in the UK and in which expenditure has increased marginally since the 1980s but employment has fallen by half:
Purpose, Virtue and Commerce
Might companies with a better sense of purpose, structures that lend themselves to success in what that company was set up to do and the exercise of what philosophers such as the late Alasdair MacIntyre would describe as virtues or excellences – shared values, goals and practices – be more enduring and ultimately more successful than those that focus narrowly on profit-maximisation alone?
https://www.ft.com/content/591ee1f2-2518-4ca4-a128-3c810f965782